Farmers and landowners are having to respond increasingly to the shift in agricultural support towards grants for 'environmentally beneficial' farming. One such example of this policy trend in the past decade is the introduction of Environmentally Sensitive Areas (ESAs), first implemented in Scotland in 1987. Within this Government-funded scheme, farmers receive financial incentives for managing their land in an environmentally friendly way, and for maintaining or improving the conservation features on the farm. Farmers and landowners are thus being encouraged to address goals and objectives other than those of production. This paper examines the decision-making of farmers and landowners when faced with an option such as the introduction of ESAs: the factors involved in ESA uptake; the trade-offs which have to be made; and the type of incentive that the ESA represents to landowners and farmers. The paper also discusses the views of farmers and landowners towards the ESA in the context of all agricultural policy, and specifically relative to the uncertainties relating to the maintenance of subsidies. This provides insights into both current and future farm/estate level responses to other agri-environmental and land-use options.